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Originally developed in 1984 as the Atari 3600, the Atari 7800 Prosystem was released to the North American market in 1986, in an attempt to compete in a revitalized home videogame market. The 7800 was actually designed by Gencomp as part of a lawsuit settlement (Gencomp had been sued for releasing a speedup chipset for Atari coin-op Missile Command).
The 7800 was compatible with pre-existing Atari 2600 game program cartridges, without the need for expansion modules or turning switches, but was also designed to use enhanced 7800-only cartridges such as the pack-in 'Pole Position 2'. Many peripherals, including a computer/keyboard and high score saving cartridge were planned but never released.
Unfortunately for Atari, the system did poorly in the late 1980's market dominated by Nintendo.
In the summer of 1984 the first 5,000 Atari 7800's had just been built in the new El Paso assembly plant. The production line manager, Brad Saville was eager to meet with Jack Tramiel to show him the new flagship Atari video game console. The meeting ended abruptly as Jack Tramiel was quoted "Get your pollution out of here! We make computers now and we don't want your garbage." The line manager was fired 2 days later. About 8-9 months later the line manager received a phone call from Atari asking him as to the whereabouts of the die molds for the Atari 7800. The ex-line manager responded that he did in fact know where they were and for $50/hour for about 200 to 300 hours of his time he would remember where they were and find them. The Atari Corp. representative who called was infuriated and informed the former production line manager that Atari's lawyers would be in contact with him. He never heard from Atari again."